Gold prices in for a roller-coaster ride

GOLD prices are having a good run this year but look set to be volatile in the last quarter. They may lack clear direction supported by uncertainty on Deutsche Bank's fallout and the US presidential election, while pressured by the prospect of a rate hike by the US Federal Reserve.

The current deterioration of Deutsche Bank weighs negatively on market sentiment and gold, being a traditional safe-haven asset, is supported by this development. With the US authorities demanding a large fine and the erosion of confidence in Deutsche Bank as hedge funds that do derivatives businesses with the German lender reduce their exposure, the bank is in an extremely fragile condition. Its failure can pose systemic risks and these worries will support gold prices.

In addition, gold prices are also being buoyed on uncertainty of the outcome of the US presidential election as both the candidates, Hillary Clinton and Donald Trump, compete head-to-head. Mr Trump's unconventional political approach creates ambiguity in the macro environment while Mrs Clinton's political experiences signify status quo. As such, market insecurities can arise should Mr Trump be elected, supporting gold prices.